Research Resources

Risks in Brics

EM risks: not going away

The inexorable rise of the Brics – in terms of growth, at least – hasn’t made them any safer from destabilising risks. In fact, they are just as exposed to global risks as they were before the 2008 financial crisis. And given the prospects for world growth are largely pinned on these economies, it’s a worry.

That’s the conclusion of the Global Risks Atlas 2012 by Maplecroft, a risk advisory company. The Brics are exposed to global risks which “could undermine their investment potential”. So what are they?

Overall, the key areas where the Brics and other EMs face bigger risks than the developed world are in governance, social resilience (how the population bounces back from disruption), exposure to the effects of climate change and demographics. These are not new but they are easy to overlook when an economy is growing at a fair lick.

Of the Brics, Brazil does the best, ranked 97 (the bigger the number, the lower the risks), mainly due to democratic stability, but it is listed as high-risk in terms of the strain on finances placed by an ageing population. China (58) also has demographic concerns for the same reasons. For India (19) and Russia (30), terrorism and political violence are also identified as important risks to business and government.